Sebi proposes regulatory body for mutual fund product distributors

The Securities and Exchange Board of India has proposed a self-regulatory body for distributors and advisors of mutual funds products.

The regulator said the distributors of mutual fund products and investment advisers are becoming important players in the market and growing in number. There are about 1.24 lakh distributors of mutual fund products as on February 28, 2019 and 1,136 investment advisers registered with Sebi as on March 19, 2019.

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AMFI revises best practices circular on AUM transfer

Association of Mutual Funds in India (AMFI) has modified certain provisions its best practices circular on transfer of assets from one distributor to another.

In the earlier regime, after the change of distributor code, the trail commission for all business done by earlier distributor was payable to new distributor on a prospective basis at the same rate at which commission was paid prior to the transfer of asset. Now, the trail commission will be basis the lower of the commission rate applicable to earlier distributor (transferor) and the new distributor (transferee). Other than this trail, no other incentive will be paid to new distributor due to the transfer of assets.

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AMFI issues uniform norms for tagging B30 transactions

Association of Mutual Funds in India (AMFI’s) Operations Committee has revised the process to be followed for generating AUM by geography report for registrar and transfer agents (RTAs) and fund houses.

From April 1, 2018, inflows from beyond (B30) cities are eligible for the extra 30 basis incentive instead of top (T15) cities earlier. As on February 2019, 15% or Rs 3.66 lakh crore of industry’s assets came from B30 locations. Around 64% of assets from B30 locations are in equity funds.

The RTAs were following a standard practice for tagging transactions as T30/B30 from April 2018. However, SEBI observed that the process followed by certain RTAs for tagging B30 transactions where the investors Pin code and city names were missing had certain lacunae.

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Source: The Economic Times, AMFI, Morningstar

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